Infibeam Avenues profit dips in FY20; net operating cash flow slumps by 92%

Publicly-listed firm Infibeam Avenues (IA) had an eventful FY20 after it disinvested in its non-core business of e-commerce and sold the wholly-owned subsidiary “Infinium'' to Ingenius E-commerce in January last year.

It was looking forward to focusing on its payment processing business as well as enterprise software solution business which had been growing considerably after bagging a contract for Government Ecommerce Marketplace (GeM) in 2017. The company claimed to have processed transactions worth Rs 90,000 crore on its platform during FY20.

Looking at absolute figures for FY20, income from operations for IA were reduced by 44% from Rs 1,159.1 crore in FY19 to Rs 648.1 crore in FY20, as per regulatory filings. The company had reported declined revenues in the last two quarters as well.

But restated revenues for FY19 which exclude the amount from divestment and demerger of non‐core businesses stood at Rs 589.1 crore, indicating a 10% Y-o-Y increase.

Significantly, the reduction in revenues was despite the increasing number of bill payments and transactions processed through its platforms CC Avenue and Bill Avenue. It reported a 91% Y-o-Y increase in the value of bill payments while at Rs 62,200 crore, payments have witnessed a Y-o-Y growth of 26% during FY20.

Net Cash flow from operations witnessed a staggering drop of 92.7% as they had reduced from Rs 308.1 crore in FY19 to only Rs 22.4 crore in FY20. 

Infibeam Avenues Ltd has seven subsidiaries and four associates including Digital Entertainment Private Limited, Avenues Payments India Private Limited, Infibeam Global EMEA FZ-LLC Associate and Instant Global Paytech Private Limited  Associate.

COVID-19 pandemic also hampered IA’s operations as the average daily payments processing volume (Volume) fell 30% compared to the pre-lockdown period of March 2020. “In the following month of April there was a subsequent dip of 20%, however, in May 2020, the average daily payments processing value (Value) grew 32% with 14% growth in volume, compared to April 2020, as there were partial relaxations in May 2020,” said company during its earnings call on June 5.

While the revenues suffered, IA managed to restrict Y-o-Y reduction in profits to only 16.8% as net profit (after tax) was diminished from Rs 126.3 crore in FY19 to Rs 105.05 crore in FY20. The company claimed this was made possible due to the optimization of costs and improved efficiencies in the company’s operations.

Similar to revenues, total expenses during the fiscal ended in March 2020 were also reduced by 45%, from Rs 1,071.5 crore in FY19 to Rs 590.5 crore in FY20.

Expenditure on payment gateway processing remained somewhat stable and at Rs 396.4 crore were the biggest cost element for Infibeam Avenue during FY20. In comparison employee benefits expenses reduced by 15.4% from Rs 73.6 crore in FY19 to Rs 62.3 crore in FY20.

While the full extent of Covid-19’s impact is yet to be unfolded, the company remains bullish on the growth of its fintech business, looking for expansion in other geographical regions. Management is of the strong opinion that the situation will normalise during this current financial year as more and more people and businesses start adopting digital technology.